June 27, 2009 (Original publish date) • By Dennis Beaver
Recently, this column took a hard look at what our nation’s recession has done to both the legal profession and to some unlucky clients who became victims of outrageous — and frequently illegal — billing practices.
While I expected and did receive a significant response from readers — telling me their own billing horror stories — I did not expect to hear from attorneys, worried their own billing methods weren’t right. This column has a very high attorney readership, and the legal community has always generously given time and been a great resource. I was touched by the candor and desire shown by those lawyers who simply wanted to do the right thing.
A surprising number of e-mails and phone calls were from the clients of one attorney in Hanford. Every one had the same complaint: “Overcharged, billed for endless reviews of the case, for drafts, re-drafts, revisions, even discussing my case with his paralegal,” as “Nancy,” wrote. (Names have been changed.)
Her e-mail began this way:
“Your article about being over-charged by a divorce lawyer really hit home. The same thing happened to me. We set up a four-way conference at my attorney’s office. When I walked in the door, the paralegal informed me that the other side had just called and canceled, then told me that since I was there, they needed my signature on a couple of papers. They put me in a room and left me there alone for an hour and charged me for that hour.
“I was so mad, that I called my ex and told him he was going to pay for that visit. But he told me his attorney had canceled the meeting three days earlier, as she was going to be stuck in court. While my ex and I do not get along, he is an honest man, and I believe what he said,” she wrote.
“A second four-way was set up, and once again I showed up to find out that it, too, had been canceled! But while I was there, the attorney used the time to fill me in on what was going on with the case, and of course charged me for that appointment as well.
“This was a simple, minimal asset divorce, no custody to fight over, and yet it took over a year and $7,500. I got sick every time I opened a bill, being charged for paperwork one month, and then for review of the same paper work the next month. I was charged hundreds of dollars a month when, literally, nothing was happening on the case.”
I phoned her, and hit the ceiling when more details were poured out. After seeing her bills, I suggested that she contact the Kings County Bar Association and request fee arbitration, as well as making a report to the State Bar. This poor gal was royally ripped off; beginning with a retainer agreement the firm had her sign. It was an illegal attempt to make her initial deposit non-refundable, by using the following language:
“This agreement is intended primarily to ensure the availability of this office to undertake services related to your Dissolution of Marriage….”
Why do I say this is an illegal attempt to make the initial deposit non-refundable? The retainer agreement uses language of what is called a “classic” or “true” retainer, which, if true, would make the deposit non-refundable. In that kind of a retainer, a lawyer is paid a monthly or yearly fee “to be available,” but that fee does not cover any services which might later be performed.
It is an incentive for the lawyer to literally remain “available” to the client — to not take on too much other work. When legal services are performed, they must be billed for separately, in addition to the retainer already paid.
When a lawyer accepts a deposit and bills against it at an hourly rate, it is therefore not a “true” retainer. Any money paid to the lawyer cannot legally be “non-refundable.”
In a paragraph titled “Retainer Fee: Retainer Fees are Non Refundable,” here is what you find:
“Attorney services are billed at the rate of $185 per hour and will be deducted from money you have deposited with us. Once any legal services have been provided, your initial deposit is non-refundable. If at any time before the conclusion of your case there is money remaining in your account, all moneys are non- refundable.”
In so many words, he is saying, “No matter what you’ve paid me, I keep it all, regardless of how much work I’ve done.” This could easily cost him his license to practice law.
Treating the client as a sucker
Things in this “legal services agreement,” become even more interesting when he describes other charges. “Support staff services are billed at a rate of $60, with paralegal services billed at $80 an hour.”
But, just what are “support staff services?” That is not defined anywhere. I found out in looking at his bills.
This guy is charging clients for his secretary’s time at $60 an hour. Give me a break. While technically allowed if clearly brought to the attention of a client and reasonable, it is almost never done.
Part of a lawyer’s cost of doing business is having a secretary. Remember, this guy is charging $185 an hour — and that’s a fair hourly rate. I guarantee you he isn’t paying his secretary anywhere near $60 an hour.
I randomly called several law offices in Hanford and asked this question:
“Do you bill for your secretary’s time in addition to your own hourly rate?” The answer was always, “No, that is a cost of doing business and is covered by the fees we charge our clients.”
If any of this sounds familiar, let me hear from you.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.